Key Points

Bitcoin derivatives traders are getting ready for a potential decrease in market activity during the summer. The implied volatility of Ethereum has also dropped, indicating that traders are expecting less volatility in prices.

According to an analysis of the market's positioning, Bitcoin derivatives traders are anticipating a quieter summer in terms of market activity.

Jag Kooner, the Head of Derivatives at Bitfinex, has observed that summers typically have lower volatility. Traders are adjusting their positions to align with this expectation.

Market Volatility Trends

Starting from mid-April, there has been a notable decline in the implied volatility of Bitcoin. This is reflected in the decrease of the implied volatility of Bitcoin's at-the-money options, decreasing from over 77% to under 60% for different expiration periods.

The implied volatility of Ethereum's at-the-money options has also decreased, indicating that traders are expecting less price movement while waiting for more clarity on Ethereum's regulatory status in the U.S.

Impacts of Regulatory Uncertainty

Bartosz Lipiński, the CEO of Cube.Exchange, interprets the decrease in implied volatility as a sign that traders are approaching the market cautiously due to regulatory uncertainties. He suggests that traders, uncertain about Ethereum's classification as a security, may be hesitant to make moves until the situation becomes clearer.

Lipiński also mentions that reduced trading volumes typically seen during the summer could lead to increased volatility due to liquidity gaps. He brings up the impact of lower liquidity on bullish crypto markets, as evidenced in 2017 and during the DeFi summer.